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2018 (1) TMI 777 - HC - CustomsFocus Product Scheme (FPS) - exports of industrial valves - case of Revenue is that such benefit is not available for export of industrial valves and is restricted only to bicycle parts - products as specified at serial no. 269, in Appendix 37D of the Handbook of Procedures - According to the respondents, industrial valves were not covered under serial no. 269 of Appendix 37D of Table 1. Held that - admittedly, export of goods covered under ITC (HS) Code 8481 is eligible for benefits under the MEIS. In the past, respondents had readily accepted that the industrial valves were covered under the products specified against serial no. 269 of Appendix 37D and were eligible for benefits under the FPS. Such benefits are also available under MEIS, which came into effect from 01.04.2015 and has effectively replaced the FPS - In this view, it would be difficult to accept that the intention of the Central Government was to not grant export incentives to industrial valves and restrict the same only to valves used in bicycles for a short intervening period. It is clarified that industrial valves falls squarely within the goods covered under serial no. 269 of Appendix 37D - The impugned notice cannot be sustained - petition allowed.
Issues Involved:
1. Validity of Trade Notice No. 11/2015 dated 14.12.2015. 2. Eligibility of industrial valves for benefits under the Focus Product Scheme (FPS) as per the Foreign Trade Policy (FTP) 2009-2014. 3. Interpretation of ITC (HS) Code 8481 in the context of the FPS. 4. Consistency of the impugned notice with previous practices and judicial decisions. Issue-wise Detailed Analysis: 1. Validity of Trade Notice No. 11/2015 dated 14.12.2015: The petitioners challenged the impugned notice, claiming it was contrary to the provisions of the FTP 2009-2014. The notice clarified that benefits under the FPS for ITC (HS) Code 8481 were intended only for bicycle parts, excluding industrial valves. The court found this interpretation unsustainable, noting that the broad classification under ITC (HS) Code 8481 should include all products under that heading, not just bicycle parts. The court concluded that the impugned notice could not be sustained. 2. Eligibility of Industrial Valves for Benefits under the FPS: Petitioner no.1, engaged in manufacturing industrial valves, claimed entitlement to FPS benefits equivalent to 4% of the FOB value of its exports. The petitioners argued that their industrial valves, classified under ITC (HS) Code 8481, should be eligible for FPS benefits. The court agreed, noting that the broad classification under ITC (HS) Code 8481 indicated an intention to include all products under that heading for FPS benefits. 3. Interpretation of ITC (HS) Code 8481 in the Context of the FPS: The court examined the relevant provisions of the FTP 2009-2014 and Appendix 37D of the Handbook of Procedures. It noted that ITC (HS) Code 8481 covers a broad range of products, including industrial valves. The court emphasized that the classification under ITC (HS) Code 8481 is not limited to bicycle parts alone. The court found merit in the petitioners' contention that where the government intended to restrict benefits to specific products, it used an eight-digit ITC (HS) Code. In this case, the four-digit code indicated a broader inclusion. 4. Consistency of the Impugned Notice with Previous Practices and Judicial Decisions: The court noted that the petitioners had previously been granted licenses for exporting industrial valves under the FPS. The court also referenced a similar case, Intolcast Pvt. Ltd. v. Union of India, where the Gujarat High Court set aside the impugned notice. The Supreme Court dismissed a Special Leave Petition against this decision, reinforcing the view that industrial valves should be eligible for FPS benefits. The court concurred with the Gujarat High Court's decision and set aside the impugned notice. Conclusion: The court allowed the petition, clarifying that industrial valves fall within the goods covered under serial no. 269 of Appendix 37D. It concurred with the Gujarat High Court's decision in Intolcast Pvt. Ltd. and disposed of the pending application. The court's decision emphasized the broad interpretation of ITC (HS) Code 8481 and the inconsistency of the impugned notice with the FTP 2009-2014 and previous practices.
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